Tech media startup 'The Information' sounds like it's run completely inefficiently, but it's actually a pretty good business

Former star Wall Street Journal reporter Jessica Lessin has a
tech media startup called The Information. She joined
a Digiday podcast to talk about the digital
media landscape and revealed a few stats about her
2.5-year-old company.

Lessin's team of reporters prefer to focus on
quality over quantity. She tells Digiday that her team
publishes just two stories per day in total, despite having eight
editorial staffers (and 15 employees in all).

That means most of her staffers write nothing most days.

That sounds really inefficient, like a death wish for a
startup. That's because
most digital publishers rely on advertisements to make
money. They may also have subscription businesses and events
businesses, like Business Insider does, but most of the money
they make comes from advertising campaigns.

Currently, advertisers
determine how much they'll spend with a publisher based on
traffic figures, like a publication's number of monthly
readers (uniques) and the number of articles they read
(pageviews) per month. And if you only write two articles per day
for a very niche audience like "The Information" does, with no
potential for your stories to go viral, that's not going to keep
the office lights on.

But Lessin doesn't care about any of that. Instead, she's focused
on creating quality articles that will attract paying
subscribers. She has the luxury of running a subscription-only
media company because she chose to bootstrap her startup from the
get-go, so she has no pressure from outside investors to scale
quickly and generate traffic.

"The Information" has a $399 annual subscription plan, which
Lessin says "thousands" of people pay for.

When asked for a more specific number, Lessin told Business
Insider her number of subscribers is "multiples" higher than
2,000 people.

So if we estimate that Lessin has 4,000 subscribers paying $399
per year (which would be a lower multiple of only 2), that's
about $1.6 million in gross annual revenue. Of course, that
number could be a lot higher if, say, the multiple is 3 or 4,
which would mean The Information is making somewhere between $2.4
and $3.2 million in gross annual revenue. But even the lower
estimate of $1.6 million is impressive, and it doesn't cost a ton
of money to run a media business.

The Information has been testing ads to acquire subscribers
on Facebook and Twitter, and there are server fees and such, so
you can assume Lessin spends $10,000 to $15,000 per month
on all that, excluding payroll, or about $120,000 per year.

If we go with the lower estimate for gross annual revenue, that
leaves about $1.48 million to pay Lessin and her 14 other
employees, which comes out to about $100,000 per person.
That'd be a high salary for a team of writers in an industry
that notoriously doesn't pay very much. Plus Lessin has said that
the number in her company's bank account keeps rising, indicating
"The Information" is profitable, despite the fact that it's
pouring most of its generated revenue back into the
business.

So, for a small, entirely-bootstrapped, 2.5-year-old media
startup to be generating $1.6 million without selling any
ads or hosting any events — that's unusual, and it's also a real
business.